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Lockdown helped Kiwis pay credit card debt, but now 'revenge spending' a risk

New Zealanders are being urged to stick to savings habits formed over lockdown and resist the urge to "revenge spend" as life at Alert Level 1 begins. 

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Kiwis managed to pay off $1 billion of credit card debt during the Covid-19 restrictions. Source: Seven Sharp

One of the silver linings of lockdown was the forced savings incurred by not being able to eat out, be entertained or go shopping on a whim.

The way we consumed and spent our precious dollars changed as spending was down 50 per cent in April compared to the April before, and Kiwis shaved $1 billion off credit card debt.

Those employed over lockdown may have managed to save a bit over the past couple of months.

Financial Advisor Carissa Fairbrother told TVNZ1’s Seven Sharp that now is not the time to be complacent now the country seems to be getting back to normal.

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There’s been a strong run in recent weeks, with new investors entering the market, but that hit a wall today. Source: 1 NEWS

“The reality is the unemployment rate was 4.2 per cent in March and many economists are saying that it’s going to be up to nine per cent in the September quarter, so there are going to be financial challenges ahead,” she says.

She offers caution to people who have seen their bank balances grow over lockdown and who may start spending, now that the nation is being encouraged to get the economy going.

“We’ve actually started calling it revenge spending. People have seen their bank balances grow over lockdown mainly due to the restrictions.

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Newsroom Pro editor Bernard Hickey joined Breakfast to explain. Source: Breakfast

“It’s a bit of a catch-22 because we are being actively encouraged to spend for the nation’s recovery,” Ms Fairbrother says.

Ms Fairbrother advises taking stock of pre- and post-Covid-19 spending habits so people can take care of their personal backyard.

She recommends starting a savings account as a way to manage money.

“It’s like a marathon. You cannot expect to get up and go on day one.

“Review your personal goals and really review your cash management,” she says.